Volkswagen Streamlines EV Lineup and Secures Battery Supply as October Test Looms

VW plans to discontinue the ID.5 as part of its 2030 plan, while three joint ventures with Gotion aim to secure European LFP cell supply.

Volkswagen is pressing ahead with a twin overhaul of its product range and its battery supply chain, betting that a leaner electric vehicle portfolio and deeper European industrial ties can steady a business navigating heavy one-off charges and tense labor negotiations.

At the center of the product rethink is the ID.5, which, according to media reports citing the company's "Zukunftsplan 2030," will be discontinued without a direct successor. The electric ID. Tiguan is set to absorb that role, covering the segments previously served by both the ID.4 and ID.5. The move trims complexity on the production line and puts familiar nameplates back in the spotlight — a consolidation the automaker frames as a way to concentrate development and manufacturing resources on higher-volume models.

That decision slots into the broader "For Europe" initiative, under which the Volkswagen Group is placing European value chains and future technologies front and center ahead of the Paris Motor Show. Beyond pure electric mobility, the company lists battery technology, software solutions and artificial intelligence as the key pillars of the transformation program.

Three Joint Ventures to Anchor LFP Cell Supply

A concrete piece of that push is the expansion of regional battery production. Together with its subsidiary PowerCo SE and partner Gotion High-tech, Volkswagen has agreed on three joint ventures. The collaborations are intended to secure a European supply chain for lithium iron phosphate battery cells and cathode material, with sites in Spain, Slovakia and Morocco.

The industrial repositioning comes amid stiff headwinds. Special items totaling roughly EUR 10 billion are weighing heavily on operating profit. Driving the adjustment were an impairment on the goodwill of Porsche AG, additional restructuring expenses and a demanding market environment in China.

Recall and Contract Terminations Add to the Load

Operational issues are piling up alongside the strategic reset. About two weeks ago, the safety committees of Volkswagen and Audi approved a recall tied to a potentially corrosion-prone fastening screw on the steering system. For the core Volkswagen brand, Germany's Federal Motor Transport Authority puts the number of potentially affected vehicles worldwide at 2,159,054 units, of which 895,832 are in Germany.

According to Handelsblatt, Volkswagen had been investigating the steering problem since October 2024. The company says only isolated cases of damage have surfaced so far, and no injuries have been reported.

At the same time, management is bracing for far-reaching talks with labor representatives. On September 30, Volkswagen gave notice on various collective agreements effective December 31, 2026. The future collective agreement covering job security is explicitly excluded from that step. Roughly a week earlier, IG Metall had presented its wage demands, sharpening the starting point for the negotiations ahead.

Analyst Trims Target as Key Dates Approach

The capital market is watching the strategic repositioning closely. On September 29, Deutsche Bank Research analyst Tim Rokossa cut his price target for Volkswagen shares to EUR 105 from EUR 115, while keeping a "Buy" rating. He cited political uncertainty, the structural importance of the Chinese market and the upcoming third-quarter figures as the main drags.

The stock has had little relief from the portfolio cleanup. The shares closed yesterday at EUR 68.64 and were down 0.4% at EUR 68.48 today, leaving them 34% lower since the start of the year — a reflection of persistent structural and market-wide pressures.

Several important markers lie ahead before the interim report for January through September, due October 29. On October 11, Volkswagen will host media, associations and policymakers at a dialogue event in Paris as part of the "For Europe" initiative. The following day, October 12, the Volkswagen, Volkswagen Commercial Vehicles, Škoda, CUPRA and Audi brands will present their new models at the Paris Motor Show. An investor update will be held in the French capital at the same time, followed on October 13 by a virtual exchange ahead of the quarterly reporting.

That quarterly report will offer the clearest read yet on how deeply the operational burdens and transformation costs are cutting into operating profit.